Compared to AT&T, Verizon's postpaid phone business had a very poor first quarter
The most important metric for a wireless provider is postpaid phone subscribers since these are the customers that pay high recurring subscription rates each month and buy new phones and accessories, and subscribe to services. For the three months that ended in March, Verizon, the nation's largest wireless carrier, reported a net loss of 127,000 retail postpaid phone subscribers.
So while the company was quick to point out that it had a 5.3% year-over-year gain in the number of gross retail postpaid phone subscribers, the number of existing customers it lost in that category exceeded gross additions by 127,000. Wall Street was expecting Verizon to report a loss of 120,000 in net postpaid phone subscribers. This compares poorly with AT&T which reported Q1 net postpaid phone additions of 424,000 subscribers.
T-Mobile will report its Q1 earnings on April 27th and is expected to surpass AT&T's figure to lead the industry in net new postpaid phone subscribers.
In the consumer end of the business, Verizon reported a decline of 263,000 postpaid phone subscribers which more than offset the 136,000 net new postpaid phone subscribers that Verizon added in its business segment during the first quarter. While consumer postpaid phone churn rose year-over-year to .84% from .77%, postpaid phone churn in the business unit was 1.16%.
Verizon lost 127,000 postpaid phone customers during the first quarte
Craig Moffett, an analyst at MoffettNathanson, was stunned by the report. He told his clients in a note, "Verizon's subscriber growth metrics remain weak, with a shocking 478,000 retail phone subscriber loss across postpaid and prepaid combined."
As you might imagine, Verizon Chairman and CEO Hans Vestberg had a more optimistic take on the quarter. "Our operational and financial results reflect the steps that we have taken to improve our performance. Compared to this time last year, we have added more postpaid phone gross additions to our network and have increased our cash flow from operations and free cash flow," the executive said.
Vestberg added, "Last month, we announced that our 5G Ultra Wideband now reaches more than 200 million people as we continue to undergo the most aggressive network deployment in our company's history. With our mobile and broadband capabilities, and our focus on network strength, we are giving more customers in more places a superior network experience."
For the first quarter, Verizon's businesses including wireless and FIOS, generated operating revenue of $32.9 billion, 1.9% lower than the operating revenue reported during the same quarter last year. Net income rose 6.5% on an annual basis to $5 billion while earnings per share rose from $1.09 in the 2022 first quarter to $1.17 this year.
Despite the report, Verizon's shares managed to rise 19 cents on Tuesday or .51% to $37.30, well off the 52-week high of $52.18 but closer to the 52-week low of $34.55.
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